7 Mich. 12 | Mich. | 1859
The bill in this case is filed to enforce certain alleged equities, which complainant claims to have, in one hundred and eighty-one acres of land, and the proceeds thereof, conveyed by complainant to defendant Atwater on the 27th day of May, 1853.
The conveyance is absolute on its face. The bill states there were three several mortgages on the land at the time it was conveyed to Atwater; one to Charles W. Rockwell and John A. Rockwell, for $5,161.70, dated 19th February, 1847, and another of the same date to William L. P. Little, for $1,338.30 ; and a third to Daniel L. C. Eaton and Abel
■That on the 16th October, 1851, Eaton and Blackmar commenced foreclosing their mortgage, by advertisement; and that, on the 8th January, 1852, the premises were sold and bid in by them, subject to complainant’s right to redeem in one year thereafter: That complainant was unable to redeem within the year, and that Eaton and Black-mar had their deed recorded, and claimed possession of the 'land: Complainant insisted they had not advertised according to law, and that the sale was therefore void, and on the 22d March, 1853, the matter was compromised by complainant quit-claiming the lands to them, and they covenanting-, at any time before the 1st October following, to- re-convey them to complainant on his paying the sum they had been bid off at, with t interest, and that complainant should have possession in the meantime.
The bill then states, that on the 27th May, 1853, complainant being unable to raise money to pay off' said incumbrances and other liabilities of complainant, Atwater offered to negotiate for, and to raise the money to pay off such liabilities, if complainant would convey to him said lands, so that he, the said Atwater, could have the control of said lands; and then and there agreed that in case complainant would so convey to him said lands, he would take charge thereof, and manage the same; that he would make sale of the whole or such part of said lands as should be necessary to pay off said liabilities of complainant, viz.; the several sums due upon said several mortgages, and the amount due from complainant to Atwater; and that, after paying said sums,he, Atwater, would re-convey such portion of said lands as should be remaining in his hands
The bill further states that, on the 12th June following, defendants Atwater and Durfee “purchased of complainant that part of said lands known and designated as the “ Steam - mill Reserve,” with mill thereon, and containing about six acres of land, for the price and sum of sixteen thousand dollars, to be applied towards the liquidation of the aforesaid indebtedness of complainant; and that, on the 17th day of the same month, complainant sold and delivered to Atwater a large quantity of pine logs, and other personal property, for $7,560.95, which sum was also to be applied towards discharging said liabilities:
That Atwater represented to complainant that, in order to make the title perfect, it would be best for him to buy in the claim of Eaton and Blackmar, and to take an assignment of the other two mortgages, and foreclose the same, and bid in the land: that on such representation complainant consented to that course: that afterwards, At-water procured a transfer of the interest of Eaton and Blackmar in the lands to defendant Green, and procured assignments to be ’made of the other mortgages to Green, and foreclosed said mortgages, and at the sale bid in the premises in the name of Green:
> . The bill also states, that Atwater and Durfee took possession of the “Steam-mill Reserve,” with the mill and buildings thereon, and that they have taken other portions of the land at prices agreed on between them and complainant, &c.: that other parcels have been sold by At-water, and that complainant has made payments to At-water in notes and demands, &c.,: that the greater part of the land has been laid out and platted, and is now known as a part of the City of East Saginaw: charges that the claims and demands for which the lands are held by Atwater as security, are paid, and prays an account, and a re - conveyance of the lands unsold.
The bill waives an answer under oath, and is taken as confessed against Durfee.
Atwater put in an answer, stating that complainant was owing him $30,000, for advances that had been made by him to complainant; that he was insolvent, and that he proposed to, and did, execute and deliver to him, Atwater, the said deed of conveyance in fee simple, in consideration of the said debt, subject to the incumbrances mentioned in the bill of complaint; and that said deed of conveyance was executed and delivered absolutely, without any copdition,: trust or agreement whatever, either express or implied; and that at the time of said conveyance, his said ' debt, together with said incumbrances, far exceeded the value of said lands: that,' at the time of the execution and delivery of the deed, he held a mortgage on the premises for the first accruing part of his demand, amounting to $8,200, executed to him by complainant, November 1st, 1850; that said mortgage moneys were wholly unpaid; as well as the balance of the $30,000 ; and that the deed of
Green filed a plea, stating that he purchased the premises on the statutory foreclosures of the Little and Rockwell mortgages, for a valuable consideration paid by him, and without notice of complainant’s equities.
The cause was put at issue, and proofs were taken, and on a hearing in the circuit court a decree was made in favor of complainant, and the case is now before us for review on appeal.
It is objected to the relief given complainant in the court below, that the case made by the bill is one of express ti’ust; and that by statute (Comp. L. p. 942 §3177), an express trust can be created by a deed or conveyance in writing only.
It is also objected that, if the case shows an absolute conveyance, but intended by the parties as a security or mortgage only, the deed, being absolute on its face, can not be turned into a mortgage by parol proof, or by proof of a cotemporaneous parol agreement.
The bill makes a case of conveyance in the nature of a mortgage, with power to Atwater to sell a part or the whole of the premises, to pay the incumbrances, and what Emerson was owing him; reserving the surplus, if any, to Emerson. This view does not wholly extricate the case from the first objection, if there be any force in that ob. jeetion; for the statute that requires express trusts to be created by deed or conveyance in writing, includes powers “over or concerning lands,” as well as express trusts.
In Wadsworth v. Loranger (Har. Ch. 113), Chancellor Farnsworth says: “That a deed absolute in its terms may be proved by parol to have been intended by the parties to operate only as' a .mortgage, can not admit of a
In Fuller v. Parish (3 Mich. 211) parol evidence was admitted to show a bill of sale, absolute on its face, was intended by the parties to be a mortgage. That was a case at law, and it was admitted by the plaintiff in error that such evidence would be competent in a court of equity. Green P. J., in giving the opinion of the court, says: “It is conceded on the part of the plaintiff in error, that in a court of equity, it would be entirely competent to show, by parol proof, that a deed absolute on its face was intended as a mortgage, and that then effect would be given to it according to the true intent of the parties. This has been too long and too well settled, and too distinctly recognized by our own courts, to admit of any question” (p. 213). And in Swetland v. Swetland (3 Mich, 482), it seems to be taken for granted as the law, both by counsel and court. Wing J. says: “if it appeared the debt due from Eli to William was not extinguished by the delivery of the deed to William, or that the deed was made for the purpose of securing the payment of a debt, it would be our duty to declare it to be a mortgage” (p. 487).
W e refer to these cases to show the general understanding of the bench and bar on this subject, and the injustice that would be done by overruling, at this late day, the case of WadswortJi v. Boranger, to those who may have looked to that case for the law, and have acquired rights under the law as there laid down. This con sideration, of itself, if we believe that case to be erroneous in principle, which we do not, would cause us to hesitate long before overruling it, believing it would be both better and safer to leave it to the legislature to correct the error, than to undertake it ourselves, as all intervening
The principle on which courts of equity proceed in this class of cases, is not' that it is in contemplation of law a fraud for A, who has made a parol agreement to sell B a piece of land, to refuse to deed the land, or to live up to his parol agreement. It would be as clear a violation of the statute of frauds in a court of equity to decree a specific performance of such contract, as it would in a court of law to sustain an action on it for damages. It is upon no supposed fraud of this kind that equity bases its action. It proceeds on a different principle, viz; the relation between the parties of debtor and creditor, or borrower and lender, and the abuse of that relation. The statute of frauds was intended for persons dealing with each other at arm’s length, and on an equal footing; and even then, when the contract has subsequently been in part performed by one party, with the assent of the other, equity will compel the latter to perform on his part, as it would be a fraud on the statute for a party to invoke its protection under such circumstances.
Courts of equity frequently set aside deeds and other contracts between trustee and cestui que trust, attorney and client, guardian and ward, and parent and child, and other like cases, when it has reason for believing the relation between the parties has been abused, when such deed or contract, had it been between parties not so related, would have been held good. The principle the court goes on in cases of debtor and creditor, is the same as in the cases we have just mentioned. The difference is in its application only. In these last cases it is to prevent the abuse of a confidence which the relation implies. In the case of debtor and creditor, the abuse of the power of coercion which a creditor sometimes, by the force of circumstances, has over the debtor. So sensible are courts of the existence of this power, and of its abuse, and that debtor and creditor do not
Courts of equity have, from an early day, interfered between creditor and debtor to prevent oppression. What is now a mortgage, was at common law, and until courts of equity interfered, a conditional conveyance of land, that became absolute on the non-performance of the condition by the grantor on or before the day mentioned in the deed. The penalty of a bond was collectable at law, until equity restrained its collection, on the payment of what was due on the condition. When the relation is mortgagor and rnortgagee, once a mortgage always a mortgage, is the maxim in equity. — See Leading Cas. in Eq. Vol. 2, pt. 2, p. 432, where may be found a large collection of cases in which deeds have been declared to be mortgages.
Honesty and fair dealing, and the good of society, require that the cupidity of man should be kept within certain limits, and not be allowed to roam at large. To define and fix these limits, and give relief when they are transcended, has ever been the province of courts of equity, and their chief excellence consists in a wise and judicious exer
The evidence clearly shows the deed was given to enable Atwater to sell the property, and, after paying the incumbrances, to pay himself what Emerson was owing him.
Atwater, in his answer, says, Emerson was owing him $30,000, for advances that he had made to him; and that he was insolvent. Of this sum, $8,200 were secured by a mortgage on the premises, given on 1st November, 1850. This mortgage, though given before, was recorded after the Eaton and Blackmar mortgage, and stood as the last incumbrance on the property.
Emerson and Atwater were brothers-in-law, and the property consisted of one hundred and eighty-one acres of land adjoining the city of East Saginaw. Its value was, in a great measure, speculative, and depended on the future growth of the city, and the use that might be made of it in platting and selling it for city purposes. Three of the witnesses, Little, Andre, and Grlasby, in speaking of its value in May, 1853, estimate it as worth, at that time, from thirty to seventy thousand dollars. Mr. Little says, the valuation he “ should put upon it, at that time, would be from thirty to forty thousand dollars; that was before we had got very much inflated.” The other two witnesses value it much higher. And from two other witnesses, it would seem Mr. Atwater himself valued it at $100,000 or more, in 1854. The value of property under such circumstances, is so uncertain and difficult to be got at, depending, as it always must, more on the future than the present, that no great importance should be attached to this testimony. It is referred to, as the parties
We have not the testimony of any witness who was present when the deed was executed. Nor is there any evidence of a settlement between the parties at the time, or of the amount Emerson was then owing Atwater, or of the discharge of Emerson’s indebtedness by Atwater. Their past transactions, for ought that appears, remained in the same coiidition after the deed was executed that they were in before.
Ashman, who was Emerson’s book-keeper at the time says he was present at several conversations between the . parties, about the time the deed was executed, and that he understood from 'such conversations, that the property was to be made over “to Atwater in trust, and the proceeds thereof applied as follows: First, to pay off ah incumbrances existing on the property; Second, to pay off the indebtedness that was claimed to be due to Atwater from the complainant, and the balance, if any, was to be refunded to complainant.” He further says, he “ distinctly understood that the conveyance, although absolute on its face, was intended to be a mere trust, for the purpose of discharging certain pressing incumbrances, and to. secure At-water for moneys claimed to be due- to him from Emerson.” He repeats the same thing in substance, but in somewhat different language, in other parts of his testimony. While Atwater was at Saginaw at 'this time, and it appears from the testimony he was not there over a week. ■Norman Little had a conversation with him regarding the
Durfee and Atwater were partners, and resided in Buffalo, in 1853. Soon after Atwater returned to Buffalo, he sent a Mr. Dorr, who was in his employ at the time, to Saginaw, to take charge of the mill property. By Dorr he sent two letters to Emerson, both written by himself one in the name of the firm, and the other in his own name. In the first, he stated Dorr was the authorized agent of Durfee & Atwater to take charge of the mill property, comprising six acres of land, &c. His individual letter to Emerson commenced as follows: “I have made an arrangement with Mr. Durfee to go in with me in the purchase of the mill and six acres, including the houses, buildings, docks, shops, logs, &o., belonging to the same, for $16,000; the logs to be paid for at cost. Mr. Dorr goes up to take possession,” &c. Near the close of the letter, he uses the following language: “ I think the arrangement a good one, and if no hindrance is put in the way of its completion, we shall soon have the balance of the property in a way of being sold in lots as may be required.” The language of this letter is deserving of notice. It is, “I have made an arrangement with Mr.
' It further appears, from Ashman’s testimony, that in the spring of 1854 Atwater agreed to take of Emerson twenty-one water lots, at $250 a lot, and to give him credit for them. Nugent says he was present when Atwater selected the lots. He does not remember the number of lots — thinks there were from twelve to fourteen. Minnick testifies that he “heard Atwater say he had bought twenty-one water lots of Emerson, and was going to put up a saw mill,” &c. Atwater also spoke of this purchase to Richardson, in a conversation between them. These are the lots on which the new saw mill, grist mill, and warehouse were afterwards built.
Without going further into the testimony on this part of the case, we think it is proved beyond a reasonable doubt, that the deed of the 21th May was not intended by the parties, at the time it was given, to be an absolute ■conveyance.
Green’s defence rests on the truth of his plea. He
Green was not at the sale. Atwater appeared, and either-he or Moore & Pennoyer, who foreclosed the mortgages,, bid off the property in his name. No money was paid at, the time by any one. The mortgages were foreclosed in-Green’s name, and he claims to be a bona fide purchaser,, without notice, from himself; for the “sale was his, though, made by an officer. If he was a bona fide purchaser of the mortgages without notice, and thereby acquired an interest in the land pro tanto, he could not increase that, interest by foreclosing the mortgages, and becoming the purchaser himself. Nor, under the circumstances disclosed by the testimony, can he be considered a bona fide holder of the mortgages without notice. It was Atwater’s duty to pay the mortgages. He did pay them, but instead of having them discharged, he took assignments of them in the name of Green. A decree of foreclosure had been obtained on the Rockwell mortgage in the Circuit Court of the United States, and the decree and mortgage belonged to the Michigan Insurance Company. Atwater paid, in cash, and in two promissory notes given by him to the Insurance Company, indorsed by Green and one Palmer, what was due on the mortgage and decree, and had them assigned to Green. A similar process was gone through with in, paying the Little mortgage. He paid Little $383.66 cash,, and gave him his two promissory notes, indorsed by Green, for the balance, and took an assignment of the mortgage, to Green. No one but Atwater was known hi either transaction to the holder of the mortgages, and it was on his request the assignment was made to Green. Nor did At-water’s agency, if he was acting for Green and not for himself, stop here. He placed the mortgages in the hands, of Moore & Pennoyer to foreclose, and paid them for their-
If the mortgages were assigned to Green, and subsequently foreclosed, and the premises bid off in his name, in pursuance of an agreement between Atwater and Green, and to vest the title in Green, to indemnify him for past and future advancements and indorsements made by him for Atwater, or Durfee & Atwater — and this, we are inclined to think, is not far from the truth — instead of proving the plea, it disproves, it, by showing that Green has a mortgage interest only in the land. Nay, more, it would seem to go further, and imply something vicious in the conveyance from Emerson to Atwater.
Green must have known of the conveyance from Emerson to Atwater. Why did he not take a deed from At-water to himself, if the deed from' Emerson to Atwater was what it purported to be on its face? There must have been some very good and cogent reason, one would think, for incurring the expenses of two foreclosures, and waiting some fifteen months and more, for a title through the Rockwell and Little mortgages, when it could as well as not be had at once from Atwater. Was it to get a title back of Emerson’s title to Atwater? And, if so, why? Was Emerson’s title to Atwater defective? It was subject to these mortgages, and tó the Eaton & Blackmar mortgage that had been foreclosed at law, and which Emerson, by an agreement with them, still had a right to redeem when he conveyed to Atwater. On paying these incumbrances, Emerson’s title was good. And before the Rockwell and Little mortgages^ were assigned to Green, Eaton & Blackmar had been paid by Atwater, and a conveyance of their interest in the land had been taken by him in his own name.
It may be said it was done to perfect Emerson’s title. The bill states Emerson consented to it on such a suggestion from Atwater. Was not Emerson’s title, with the exception of the incumbrances, good? Nothing appears to the contrary. If not, how was it to bettered by the foreclosure of these mortgages? They were given by Emerson and one Eldridge, when they owned the premises together, and Eldridge had conveyed his interest to Emerson, or to
The objection to Atwater’s testimony is sustained. He was examined as a witness for his co-defendant Green. His examination, instead of being confined to matters in which he was not interested, in -proof of the plea, was extended to the whole case. This was wrong. It should have been restricted to the truth of the plea, which was the only issue between complainant and the defendant Green. So much of his testimony as relates to the plea, tends to show Green holds the property for advances to, and liabilities for, Atwater, or Durfee & Atwater. The plea is of an absolute, and not a mortgage interest in the land, and is not sustained by his testimony. If it was of a character to be proved by his testimony, he would most clearly be interested, for it would take the property from Emerson to pay witness’ own debts. As his evidence, without reference to the plea, shows his interest in the matter to which he was examined, it must be rejected, for it is the interest of the party in the subject matter to which he is examined, and not the effect Ms evidence may have in the final determination of the issue, that renders him incompetent.
The Circuit Judge made a final, decree without any reference to a commissioner, to take and state an account between the parties, or to inquire and report what part of the property had been sold, and what remained unsold, &c. We do not see how a final decree could be entered, understandingly, without such a reference, and a report thereon. For this cause the decree must be reversed, and an interlocutory decree be entered, declaring the deed from Emerson to Atwater of the 27th May, 1853, though absolute on its face, was intended by the parties to be, and is, in its nature, a mortgage, with power to Atwater to sell the whole or a part of the premises, to pay off the incumbrances and the debt Emerson was owing Atwater:
And there must be a reference to a commissioner to take and state an account between complainant, on one side, and Atwater and Green on the other, charging complainant with what he was owing Atwater on the 27th May, 1853, with all advances, if any, since then made to complainant, and debts incurred by him to Atwater or Green, if any; with the several incumbrances on the property at the time it was conveyed, and the judgment of the Michigan Insurance Co. assigned to Green — said judgment to be discharged by Green; with the rent of the house and lot on the six acres occupied by complainant; and with such other just and equitable demands as should be allowed to Atwater and Green, or either of them: And crediting complainant with the sale of the old mill and six acres of land, at $16,000; with the twenty-one water lots at $250 each, and all moneys received on sales or contracts of sale of any part of the property; with all payments, if any, made to Atwater, and debts incurred by Atwater to complainant since the said 27th May, 1853, and with such other demands, if any, as should in justice and equity be credited complainant.
At first we were in some doubt with which of the considerations, stated in the two bills of sale of 27th May, 1853, and 17th June following, complainant should be credited. They are both for the same property. The con sideration of the first is $5,000, of the last, $7,560.95. As the case stands, we think he should be credited with the $7,560.95, for the following reasons: The first bill of sale bears date on the day the real estate was conveyed, but there is no evidence the two instruments were executed at the same time, or are parts of one and the same
The commissioner must also inquire and report what part
To prevent any misconstruction of what we have said, we must be understood as speaking of Emerson’s interest in the land conveyed to Atwater, and not of the Jennison interest, whatever that interest may be, as no mention is made of it in the pleadings, and it is referred to incidentally only in the testimony. What it is, does not appear from the papers before us.
